Free Money !! Free Mortgage !!

That was just one of the various types of lending advertisements that are not permitted by Regulation Z

The 2008 revisions to Regulation Z include a list of seven prohibited advertising practices when advertising mortgage loans.  These prohibitions went into effect on October 1, 2009.   

These 7 practices are now identified by the Federal Reserve as illegal:

• Misleading advertising of “fixed” rates and payments:  The use of the word “fixed” in advertisements for these types of loans is prohibited unless there is conspicuous and equally prominent information about variable rates and increasing payments.
• Misleading comparisons in advertisements:  Comparisons between an advertised mortgage and a hypothetical loan that a consumer may have are prohibited unless the ad includes the requisite disclosures regarding APRs and payments.  
• Misrepresentations about government endorsement: Statements that lead consumers to the incorrect assumption that a mortgage product is endorsed by the government are illegal.
• Misleading use of the current lender’s name:  Direct solicitations that lead consumers to the incorrect assumption that their own lender is contacting them with information on mortgage products. We have all received those !!
• Misleading claims of debt elimination:   For example..."Refinance today and wipe your debt clean!” 
• Misleading use of the term counselor:  An advertisement cannot refer to a for-profit lender, mortgage broker, or its employees as a “counselor”
• Misleading foreign-language advertisements:  Simply stated, using the language barrier to mislead consumers in the advertising. 

Regulation Z prohibits the use of misleading terms in advertisements for home equity loans.  “Free Money!” is an example that the regulations provide of a misleading and, therefore, prohibited term.